A.

Straight Problem – Process Costing – Without Beginning Inventory

Spring Corporation started operation on October 1, 2018. It has three processing departments: X,
Y and Z. The following information was available during the first month of production:
October 2018
Quantity Department X Department Y Department Z
Started in process 4,000 3,000 2,800
Finished and transferred to next dept. 3,000 2,800 2,000
Work in process, end 1,000 200 800
Stage of completion 20% 50% 25%
Cost incurred
Materials P 64,000 P 34,800 P 22,000
Labor 38,400 29,000 13,200
Overhead 51,200 23,200 8,800
P 153,600 P 87,000 P 44,000
Requirement:
Prepare a Production Report using the following assumptions:
a. Materials are added 100% at the start of the process.
b. Materials are added 100% at the end of the process.
a. Materials are added 100% at the start of the process. (Dept. X)
Materials Conversion Cost
Equivalent Production
Completed and transferred 3,000 3,000
In process, end 1,000 1,000 x 20% = 200
Equivalent production 4,000 3,200

Cost to be accounted for:

Materials 64,000/4,000 16
Labor 38,400/3,200 12
FOH 51,200/3,200 16
Total cost 153,600 44
 Cost Accounted as:
Completed and transferred 3,000 x 44 132,000
In process, end
Materials 1,000 x 16 16,000
Labor 200 x 12 2,400
FOH 200 x 16 3,200
Total 153,600

b. Materials are added 100% at the END of the process. (Dept. X)

Materials Conversion Cost
Equivalent Production
Completed and transferred 3,000 3,000
In process, end 0 1,000 x 20% = 200
Equivalent production 3,000 3,200

Cost to be accounted for:

Materials 64,000/3,000 21.333
Labor 38,400/3,200 12
FOH 51,200/3,200 16
Total cost 153,600 49.333
Cost Accounted as:
Completed and transferred 3,000 x 49.333 148,000
In process, end
Materials 0
Labor 200 x 12 2,400
FOH 200 x 16 3,200
Total 153,600
a. Materials are added 100% at the start of the process. (Dept. Y)
Materials Conversion Cost
Equivalent Production
Completed and transferred 2,800 2,800
In process, end 200 200 x 50% = 100
Total 3,000 2,900

Cost Accounted for:

Preceding department 132,000/3,000 44
Materials 34,800/3,000 11.6
Labor 29,000/2,900 10
FOH 23,200/2,900 8
Total cost 219,000 73.6

Cost Accounted for:

Completed and transferred 2,800 x 73.6 206,080
In process, end
Preceding dept 200 x 44 8,800
Materials 200 x 11.6 2,320
Labor 100 x 10 1,000
FOH 100 x 8 800
Total 219,000

b. Materials are added 100% at the end of the process. (Dept. Y)

Materials Conversion Cost
Equivalent Production
Completed and transferred 2,800 2,800
 In process, end 0 200 x 50% = 100
Total 2,800 2,900

Cost Accounted for:

Preceding department 148,000/3,000 49.3333
Materials 34,800/2,800 12.4286
Labor 29,000/2,900 10
FOH 23,200/2,900 8
Total cost 235,000 79.7619

Cost Accounted for:

Completed and transferred 2,800 x 79.7619 223,333
In process, end
Preceding dept 200 x 49.3333 9,867
Materials 0 0
Labor 100 x 10 1,000
FOH 100 x 8 800
Total 235,000

a. Materials are added 100% at the start of the process. (Dept. Z)

Materials Conversion Cost
Equivalent Production
Completed and transferred 2,000 2,000
In process, end 800 800 x 25% = 200
Total 2,800 2,200
 Cost Accounted for:
Preceding department 206,080/2,800 73.6
Materials 22,000/2,800 7.8571
Labor 13,200/2,200 6
FOH 8,800/2,200 4
Total cost 250,080 91.4571

Cost Accounted for:

Completed and transferred 2,000 x 91.4571 182,914
In process, end
Preceding dept 800 x 73.6 58,880
Materials 800 x 7.8571 6,286
Labor 200 x 6 1,200
FOH 200 x 4 800
Total 250,080

a. Materials are added 100% at the end of the process. (Dept. Z)

Materials Conversion Cost
Equivalent Production
Completed and transferred 2,000 2,000
In process, end 0 800 x 25% = 200
Total 2,000 2,200

Cost Accounted for:

Preceding department 223,333/2,800 79.7618
Materials 22,000/2,000 11
Labor 13,200/2,200 6
 FOH 8,800/2,200 4
Total cost 267,333 100.7618

Cost Accounted as:

Completed and transferred 2,000 x 100.7618 201,524
In process, end
Preceding dept 800 x 79.7618 63,809
Materials 0 0
Labor 200 x 6 1,200
FOH 200 x 4 800
Total 267,333

B. Straight Problem – Process Costing – With Beginning Inventory

The following information were gathered from the books of Broadway Company for the month
of June 2015:
Department A Department B
Units:
In process, beg. 30,000 20,000
Stage of completion 20% ¼
Finished and transferred 70,000 50,000
Finished and on hand 20,000 10,000
In process, end 10,000 ?
Stage of completion 50% 40%
Costs:
In process, beg. P 45,000 P 24,000
Cost this month:
Materials 120,000 130,000
Labor 30,000 29,000
Overhead 28,000 30,000

Requirement: Cost of Production Reports for two departments using FIFO and average method,
under the following assumptions
 1. Materials are added at the start of the process
2. Materials are added at the end of the process

Note: In this problem, only FIFO method is required because the amount of each element of
manufacturing cost for beginning inventories are not given. For average method – bonus.

FIFO method:

1. Materials are added at the start of the process

Materials Conversion Cost

Equivalent production:

Beginning inventory 0 30,000 x 80% = 24,000

Finished and transferred 70,000 – 30,000 = 40,000 40,000

Finished and on hand 20,000 20,000

In process, end 10,000 10,000 x 50% = 5,000

Total 70,000 89,000

Cost to be accounted for:

Beginning inventory 45,000

Cost to this dept.

Materials 120,000/70,000 1.7143

Labor 30,000/89,000 .3371

FOH 28,000/89,000 .3146

Total 223,000 2.366

Cost Accounted as:

Completed and transferred:

Beginning inventory 45,000

Additional cost:
 Labor 24,000 x .3371 8,090

FOH 24,000 x .3146 7,550

Started this dept. 40,000 x 2.366 94,640

Finished and on hand 20,000 x 2.366 47,320

In process, end

Materials 10,000 x 1.7143 17,143

Labor 5,000 x .3371 1686

FOH 5,000 x .3146 1,573

Total 223,000

FIFO method:

1. Materials are added at the start of the process (Dept. B)

Materials Conversion Cost

Equivalent production:

Beginning inventory 0 20,000 x 75% = 15,000

Finished and transferred 30,000 30,000

Finished and on hand 10,000 10,000

In process, end 30,000 30,000 x 40% = 12,000

Total 70,000 67,000

Cost to be accounted for:

Beginning inventory 24,000

Cost from preceding dept. 155,280/ 70,000 2.2183

Cost to this dept.

Materials 130,000/70,000 1.8571

Labor 29,000/67,000 .4328

FOH 30,000/67,000 .4478

 Total cost 368,280 4.956

Cost Accounted as:

Completed and transferred

Beg. Inventory 24,000

Additional cost:

Labor 15,000 x .4328 6,492

FOH 15,000 x .4478 6,717

Transferred 30,000 X 4.956 148,680

On hand 10,000 x 4.956 49,560

In process, end

Preceding dept. 30,000 x 2.2183 66,549

Materials 30,000 x 1.8571 55,713

Labor 12,000 x .4328 5,194

FOH 12,000 x .4478 5,374

Total 368,280

2. Materials are added at the end of the process (Dept. A) – FIFO Method

Materials Conversion Cost

Equivalent production:

Beginning inventory 0 30,000 x 80% = 24,000

Finished and transferred 70,000 – 30,000 = 40,000 40,000

Finished and on hand 20,000 20,000

In process, end 0 10,000 x 50% = 5,000

Total 60,000 89,000

 Cost to be accounted for:

Beginning inventory 45,000

Cost to this dept.

Materials 120,000/60,000 2

Labor 30,000/89,000 .3371

FOH 28,000/89,000 .3146

Total 223,000 2.6517

Cost Accounted as:

Completed and transferred:

Beginning inventory 45,000

Additional cost:

Labor 24,000 x .3371 8,090

FOH 24,000 x .3146 7,550

Started this dept. 40,000 x 2.6517 106,068

Finished and on hand 20,000 x 2.6517 53,034

In process, end

Materials 0

Labor 5,000 x .3371 1686

FOH 5,000 x .3146 1,573

Total 223,000

Materials are added at the end of the process (Dept. B)

Materials Conversion Cost

Equivalent production:

Beginning inventory 0 20,000 x 75% = 15,000

Finished and transferred 30,000 30,000

Finished and on hand 10,000 10,000

In process, end 0 30,000 x 40% = 12,000

Total 40,000 67,000

Cost to be accounted for:

Beginning inventory 24,000

Cost from preceding dept. 155,280/ 70,000 2.2183

Cost to this dept.

Materials 130,000/40,000 3.25

Labor 29,000/67,000 .4328

FOH 30,000/67,000 .4478

Total cost 368,280 6.3489

Cost Accounted as:

Completed and transferred

Beg. Inventory 24,000

Additional cost:

Labor 15,000 x .4328 6,492

FOH 15,000 x .4478 6,717

Transferred 30,000 X 6.3489 190,467

On hand 10,000 x 6.3489 63,489

In process, end

Preceding dept. 30,000 x 2.2183 66,549

Materials

Labor 12,000 x .4328 5,194

FOH 12,000 x .4478 5,374

Total 368,280